Preparing for liberalized Asean financial services
By Paolo G. Montecillo Philippine Daily Inquirer
12:10 am | Tuesday, July 1st, 2014
Photo from bsp.gov.ph and AP FILE PHOTO
The regulatory bank branching restrictions in Metro Manila expire July 1, allowing local lenders to compete more freely for business inside the nation’s capital.
In line with rules issued in the middle of 2012, restricted areas in Metro Manila have been opened to banks’ expansion starting Tuesday, in line with the central bank’s push to promote the industry’s growth.
This comes ahead of the opening up of banking services in the Southeast Asian region, which means the eventual entry of more foreign financial institutions that will compete head-to-head with local players.
Older rules prohibited banks from opening too many branches in certain areas of Metro Manila, particularly places where other banks were already present.
The restrictions were imposed to avoid the overcrowding of banks in the metropolis and, at the same time, encourage lenders to expand their networks in the provinces.
Having bigger networks would allow the local banking sector to at least maintain their dominance over the Philippine market even as foreign banks try to gain a foothold.
The expansion of branch networks will also improve the banking sector’s deposit-taking operations and the mobilization of these funds through new loans to businesses and households.
BSP Deputy Governor Nestor A. Espenilla Jr. earlier this year said the lifting of branching restrictions was part of the regulator’s policy of allowing banks to expand as they wish, which would benefit consumers.
“We recognize the need to include more people in the financial system. One way to get them is to make banks nearer to the public,” Espenilla said in a previous interview.
In the first quarter of 2014, the BSP approved applications for the establishment of 90 new bank branches across the country. In the same three-month period, data released this week showed 96 additional bank branches were put up by local lenders, while two more branches were reopened.
Data from the BSP showed that there were 10,020 banks and bank branches across the country at the end of March. More than half of these bank offices were owned by universal and commercial lenders.
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